JPMorgan Chase & Co.'s Chase Bank USA unit does not have to continue fighting a class action alleging it improperly increased credit-card holders' interest rates, the Supreme Court ruled Monday.
JPMorgan Chase did not violate a Federal Reserve Board rule when it raised a customer's credit card interest rate for delinquency or default without providing written notification, the court said, resolving a class action that began in 2004.
In a unanimous opinion written by Justice Sonia Sotomayor, the court said JPMorgan Chase's cardholder agreement stipulated the bank could increase lead plaintiff James A. McCoy's interest rates in the event of a default, consistent with the Fed's interpretation of Regulation Z of the U.S. Truth in Lending Act at the time of the transactions.
The Fed informed the court that, until 2009, Reg Z did not require the bank to provide a change-in-terms notice before raising his interest rates, Sotomayor wrote. The court "defers to an agency's interpretation of its own regulation, advanced in a legal brief, unless that interpretation is 'plainly erroneous or inconsistent with the regulation,' " she said.
The Fed in July 2009 implemented a new rule requiring lenders to notify customers at least 45 days in advance of any change in interest rates. A JPMorgan Chase representative said it had no comment on the ruling.
